Cross-Selling: What It Is And How It Works

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Cross-sellingThis is an in-depth guide to cross-selling.

In this guide you’re going to find out:

  • What is cross-selling?
  • What’s the difference between upselling and cross-selling?
  • How does cross-selling work?
  • Why do you need cross-selling?
  • Cross-selling examples.
  • And so much more.

So, let’s get right into it.

What Is Cross-Selling?

What is Cross-selling?Cross-selling is a sales technique that involves offering an additional product or customer to an existing customer. It involves selling complementary or related products to a customer to increase the value of a sale.

It is one of the most effective marketing strategies used by both online and brick-and-mortar businesses.

One of the most effective ways to generate more revenue and grow your business is by offering additional products and services to existing customers.

According to our data, existing customers are 50% more likely to try different products and spend 31% more than new clients. This is where cross-selling comes in with the impact it has on various businesses.

How Does Cross-Selling Work

Cross-selling works by banking on an existing relationship between you and your customer to boost your sales.

Since you’re already familiar with a customer’s needs and objectives, it is easier to offer them a product or service they need.

Cross-selling involves selling related, supplementary products or services based on a customer’s interest in or purchase of one of your company’s products.

Cross-selling is one of the primary methods of increasing a business’s Average Order Value (A.O.V.) and revenue.

The element of risk in cross-selling is the existing relationship could be disrupted.

Therefore, it is vital to ensure the additional or complementary product adds value to both the customer and your business.

For instance, if a client purchases a smartphone, suggesting a screen protector for that particular model adds value to the customer since it protects the phone from damage.

Cross-Selling vs. Upselling

Most people often confuse cross-selling and upselling.

Upselling vs Cross-Selling

Cross-selling and upselling are sales tactics used to convince customers to purchase more. However, there are differences to consider.

It is crucial to note that the two are not the same.

Upselling works by selling a higher-end version of the current product.

For example, if a customer wants to buy a 32 GB storage model, you can suggest a 64 GB or 128 GB model.

While cross-selling is selling another product to provide additional benefits to a client.

In this article, you can learn more about the differences between upselling and cross-selling.

Why Cross-Selling Is Important?

Cross-selling is important not only because it boosts revenue, but also because it increases customer satisfaction, builds engagement, and helps to create solid and lasting customer relationships.

Why Do You Need Cross-Selling?

You need cross-selling because:

  1. It is a cheaper way of increasing sales
  2. It increases customer retention
  3. To build customers’ trust in your brand
  4. To grow your business

Let’s take a look at each of these more in-depth.

1. It Is a Cheaper Way of Increasing Sales

Increasing sales is difficult for both online and offline businesses.

The easiest way to make more sales is through exploiting current relationships and selling more to existing customers.

The most expensive part of the customer acquisition process is finding a customer and starting a sales pitch.

This is why most businesses incur high advertising expenses.

Cross-selling helps you cut down these costs because you already know your customers and maybe some essential data about them.

2. It Increases Customer Retention

Customer retention increases your customer lifetime value and boosts your revenue.

The more products a customer purchases from you, the longer they will continue to purchase from you.

Successful cross-selling gives you an added advantage in retaining your customers and increasing your profit margin.

3. To Build Customers’ Trust In Your Brand

The first barrier to forming a long-lasting business relationship with your customer is trust.

By cross-selling, you’re introducing customers to various products and services you offer.

This increases their experience using your brand, especially if you add value.

By adding value, you can form long-lasting relationships with clients who will become loyal to your brand.

This might turn them into brand ambassadors and spread the word within their circles.

4. To Grow Your Business

Successfully scaling a business involves boosting sales, increasing revenue generated, forming long-lasting relationships with customers, and building customer loyalty and customer lifetime value (CLV).

All these come with cross-selling.

Therefore, when done correctly, cross-selling is useful in growing your business and increasing your customer base.

Cross-Selling Examples

Examples of cross-selling include:

  • Fast food restaurants asking: “Do you want fries with that?”.
  • A laptop seller offers customers a mouse, pen-drive, and/or accessories.
  • eCommerce websites showing “customers also bought.”
  • Toys shop offering batteries for electronic toys.

How to Cross-Sell?

There are so many approaches you can use to cross-sell.

However, all of them are geared towards increasing the average value of a sale.

Here are a few steps on how to cross-sell:

  1. Note the products and services suitable for cross-selling. Identify the products or services that complement each other. Research what customers often buy as add-ons, common products purchased together, or products that have initially been successful as cross-selling from competitors or well-reputable companies.
  2. Identify existing customers suitable for cross-selling, preferably by tracking their purchasing history. Take a look at customer purchases using effective sales and marketing tools powered with A.I. sales analytics. Such software allows you to view customers’ histories and depict the products they were initially interested in from your page.
  3. Create a cross-selling campaign. The last step is to identify the best strategy for presenting cross-selling products to customers. For example, do you want the products or services to appear during the checkout process, as a bundle, through an email marketing campaign, etc? Test different campaigns to determine which performs best for customers for better results.

Cross-Selling Pros and Cons

The following are the pros and cons of cross-selling:

Benefits of Cross-Selling

  • Increases sales revenue and average order value.
  • Improves customer satisfaction.
  • Increases customer lifetime value and helps businesses form deeper connections with customers.
  • Strengthens customer relationships.
  • Builds customer loyalty in your products and services and, ultimately, in your brand.
  • Increases chances of getting more qualified leads, especially through referrals from loyal customers.
  • Gives you a personal selling advantage that sets you apart from your competitors.

Potential Drawbacks of Cross-Selling

  • If used ineffectively, it can be annoying to customers.
  • As a seller, you face the risk of disrupting and possibly ruining existing relationships with clients.
  • It requires a thorough analysis of customer data and metrics because cross-selling to the wrong customer or using the incorrect strategy can reduce your business’s overall profitability.

Most Popular Cross-Selling Techniques

Cross-selling isn’t a new concept in marketing. It is a common trend, especially for eCommerce.

Here are some of the most popular cross-selling techniques:

1. Checkout Page Cross-Selling

The checkout page cross-selling involves targeting customers before they complete their shopping process.

The customer is presented with a cross-sell in the final checkout process.

This works better if you present the customer with an affordable price.

Additionally, use simple but persuasive language.

An excellent example of checkout page cross-selling is seen in Wayfair.

Wayfair suggests complementary items on the checkout page using the phrase ‘you might also need’.

Waifair cross-sell example

The word need subtly sparks up a sense of urgency.

The cross-sell product is often cheaper but more valuable.

For example, if you buy a rug, they supplement it with a hold rug pad or a fabric cleaner.

2. Email Cross-Selling

As the name depicts, email marketing is used to sell related products.

You can send cross-sell emails after a customer has purchased, after they have opted in to your newsletter, or once they have added a product to the cart.

This cross-selling method is effective because people who receive your emails already know your product and have engaged with your business, brand, or offers.

One of the companies that use email cross-selling is Dollar Shave Club.

Dollar Shave Club is famous for offering affordable monthly subscriptions for shaving supplies.

Before sending out your monthly package, the company emails its customers to promote additional products that will further enhance their shaving experience.

Dollar Shave Club Cross Sell Example

This creates a sense of urgency since customers are working within a tight time frame from when they receive the email to when their monthly package is shipped.

3.  Product Page Cross-Selling

This is done on the actual product page. As a seller, you present your customer with a complementary or related product.

One of the most used examples of product page cross-selling is Amazon.

According to online reports, 35% of Amazon’s sales are generated by their famous cross-selling phrases “Customers who bought this item also bought” and “Frequently bought together” located at the bottom of every product page.

The first phrase uses customer data to create cross-selling opportunities.

Also, showing ‘customers who bought this item also bought’ helps to validate a customer’s choice and pushes them to purchase the next product because they assume that’s what fellow shoppers do.

4. Customer Experience Cross-Selling

This involves turning a customer’s experience into an opportunity to make an additional sale by presenting them with a way to customize their purchase.

A good example is Glossier which sells beauty products.

When you come across a product on Glossier, you can also see ‘how to use’ instructions.

Glossier cross sell example

The usage direction will also suggest related products that enhance your experience when using a particular item, such as cotton rounds or sunscreen.

This gives a customer the chance to customize what they ‘add to the bag’.

For instance, you can buy a whole package of the Glossier solution, with cotton rounds and an invisible shield for a full cleansing experience.

5. Price Strategy Cross-Selling

In price strategy cross-selling you’re suggesting a product to a customer in exchange for saving or a price reduction.

It involves bundling, where customers pay less when they purchase a package rather than one particular product.

This strategy is similar to offering discounts while pushing more sales.

For example, Sephora is an online retailer that sells makeup and beauty products and offers a free bundle of different products.

They have weekly offers to allow customers to build their bundles as long as they meet their requirements.

Cross-Selling Best Practices

If you’re ready to start cross-selling then pay attention to these cross-selling best practices:

  • Illustrate how the additional product works with the product under purchase. This will demonstrate value to your customers and prompt them further to purchase the extra product.
  • Aim to provide maximum value. You can quantify value by making a customer focus on the bigger picture, apart from price. For instance, you can talk more about reliability and usability.
  • Focus on timing and the context of your offer. Timing is everything in cross-selling. Always offer a complementary product or service at the right time in the right place.
  • Address the potential customer’s needs that may arise from the purchased product. For example, a customer buying a shaving razor will definitely need shaving cream. This makes it easier for customers to purchase additional products.
  • Provide bundled discounts on complementary items to encourage immediate purchases. To make your deal even better, include temporary savings on your offer.
  • Restrain where possible. Filling your customer’s timeline with suggestion after suggestion might disrupt their attention and even make them focus on another product entirely and abandon the initial purchase.

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